UPDATE: RM Sees Pending BSF Contracts Being Scaled Back

26th Jul 2010 12:07

(Adds finance director comment, detail.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--RM PLC (RM.LN) expects to find out soon if it has won six Building Schools for the Future, or BSF, projects, although the amount of work required may be scaled back significantly from what was originally expected, it said Monday. RM is one of the main providers of educational software, computers and services to U.K. schools. Earlier this month it said GBP200 million of future revenue could be under threat from cuts to spending in schools, after the U.K. government announced plans to slash public spending in a bid to narrow the U.K.'s budget deficit. RM earlier this month won a GBP29 million BSF contract to provide managed ICT services to schools in Stoke-on-Trent, U.K., and remains cautiously optimistic about the six projects still to close. "We're still in line for our year to September 2010 and we've got a caveat which says the full-year result is likely to be back-ended but I think it's important to note what they [the BSF programs] are. In some cases the number of schools covered has been scaled back very significantly, therefore we have to work out if it's still a viable proposition," Finance Director Iain McIntosh told Dow Jones Newswires. The government is individually reviewing the BSF projects which are close to financial close. McIntosh estimates the process will take up to four weeks, but said RM will issue statements once it knows whether it got the projects or not. The scale of the programs also looks set to be much-reduced from the original plans. "We have to assess exactly what will come out but for example the Stoke one was a large one, so to get that was good news," he said. RM isn't solely dependant on BSF. It also marks exam papers online and provides other education resources. "There's still going to be spending on schools in some form but there's likely to be a bit of a gap until we see what that form will be," McIntosh said. RM plans to downsize its 60-strong strategic projects bid team and will book a restructuring charge this fiscal year of about GBP1.5 million. McIntosh said RM will still meet market expectations for full-year earnings, which according to FactSet is for a pretax profit of between GBP18.3 million and GBP20.7 million. RM said it will try and redeploy as many of its staff as possible. It has already cut costs associated with bidding for BSF projects by reducing contract staff and external spending. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 26, 2010 07:07 ET (11:07 GMT)